Oil reserves and resources as function of oil price

The following is an excerpted version of the article at Crude Oil Peak

BP annually publishes a review with so-called proved oil reserves. The latest version is from June 2016. It is well known that the reserve definitions used in this review are inconsistent. We look at the anomalies in the reserve history. (Fig 1) Following volumes have been added over the years: 300 Gb of resources by OPEC in the 1980s, 200 Gb from tar sands in the late 1990s and early 2000s and another 200 Gb of heavy and extra heavy oil from Venezuela from 2007 onwards. Tar sands and heavy oil have a completely different production profile from conventional oil.

The Norwegian oil consultant Rystad recently published what they think the proven and probable oil reserves are. Using current production data we can calculate the reserve life (Fig 2).

Fig 2: Oil reserve life using Rystad data table

We see that 2P reserves would be theoretically sufficient to maintain current production for another 10 years or so but that new discoveries would be needed for the 10 years thereafter.

Rystad has also tables which show how much oil there is in different countries depending on the oil price. This is something the BP review fails to address. Motorists enjoy of course lower prices at the pump but they are not aware of this dependency. This is shown in the following graph (Fig 3).

Fig 3: Economically viable oil reserves as function of oil price

The world has just ended an experiment with $100 oil so anything above 1,300 Gb is unlikely to be produced. On the lower end, at $40, oil may cover the next 20 years only, not much more. Take your pick on any other oil price in between.

In order to put this into context, it is important to mention that French geologist Jean Laherrere, one of the founding fathers of ASPO, has released an updated estimate of his 2P reserves – without unconventional oil (Fig 4). It is the technically recoverable oil irrespective of oil price.

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